By Rebecca Howard
Nov. 16 (BusinessDesk) - New Zealand's manufacturing activity expanded in October to its highest level since May as production and new orders improved.
The BNZ-BusinessNZ performance of manufacturing index climbed to a seasonally adjusted 53.5 last month, 1.6 points higher than September and about the long-term average of 53.4. A reading of 50 separates expanding activity from contraction.
"There was a glimpse of better trading conditions in October for New Zealand’s manufacturing sector. This follows a few months of slower, constrained expansion," BNZ senior economist Doug Steel said.
The production measure rose to 52.8 from a mildly contractionary 49.9 in September, while new orders lifted to 56.7 from 52.9 and employment rose to 52.4 from 50.9 in the prior month. Finished stocks were at 53.0 from 52.8 while deliveries eased to 50.5 from 52.3.
"In line with the improved overall result, the proportion of positive comments, 58.3 percent, also increased, with demand for products from offshore customers noted throughout. Others noted seasonal impacts such as improving weather conditions, as well as pre-Christmas season orders," said Catherine Beard, BusinessNZ's executive director for manufacturing.
Steel noted that many measures of business confidence have been "wallowing in deeply negative territory for some time now" and markets have been wary that the economy may veer in that direction. Recent data, however, continues to defy weak confidence. Solid gross domestic product data and employment growth are good examples, he said.
"The latest lift in the PMI, as a measure of business outcomes, rather than sentiment, adds to the case that the economy continues to hold together heading into year’s end," Steel said.